Employees in Developed and Developing Economies Disagree Over
Retirement Expectations and the Need to Work Longer, Towers Watson
Survey Finds

Survey reveals confidence declines 25 years into retirement for
most economies

September 10, 2014 09:05 AM Eastern Daylight Time

ARLINGTON, Va.--(BUSINESS WIRE)--Retirement security has become an increasingly important issue for
employees around the world. However, when it comes to retirement
expectations or how long they need to work to afford a comfortable
retirement, the views of employees in developing and developed economies
differ greatly, according to a survey by global professional services
company Towers Watson (NYSE, NASDAQ: TW).

The Towers Watson Global Benefit Attitudes Survey, a survey of more than
22,000 employees in 12 economies, found in developing economies
including Brazil, Chile, China, India and Mexico, between two-thirds and
three-fourths of respondents expect economic progress to usher in
continually improving standards of living in retirement. Conversely, in
developed economies (Australia, Canada, Germany, Japan, the Netherlands,
the U.K. and the U.S.), only 20% to 40% of workers expect to enjoy the
same or better standards of living in retirement than earlier
generations.

The survey also found that in most economies, a majority of employees
are confident of being able to afford 15 years of retirement. But
confidence declines substantially when employees are asked to look
further into the future. In developed economies, typically two-thirds of
respondents believe their financial resources will support 15 years of
retirement, but less than half are confident when considering 25 years
into retirement.

“Despite improving corporate financial performance in developed
economies and more benign economic conditions in developing economies,
large numbers of employees have undergone considerable change and
uncertainty in the workplace,” said David Speier, senior consultant at
Towers Watson. “As a result, many workers have become more insecure
about their jobs and finances. Most employees globally believe they are
behind schedule on saving and find it difficult to catch up because they
may not have the financial means to do more in this environment. It’s no
wonder that retirement security has taken on heightened importance for
employees worldwide, with the majority in all economies recognizing the
need to save more, both generally and specifically for retirement.”

Changing Views on When to Retire

In most of the developed economies, one-third to nearly one-half of
respondents have decided to extend their working years, often
substantially. The average increase is five years in Australia and the
U.S.; four years in Canada, Japan and the U.K.; and three years in
Germany and the Netherlands. As a result, the average anticipated
retirement age is now over 65 in Australia, the Netherlands, the U.K.
and the U.S. On the other hand, in developing economies, most workers
haven’t changed their anticipated retirement age over the past three
years. And of those who changed their minds, more expect to retire
sooner rather than later.

“The expectation of longer careers in developed economies partly
reflects longer life expectancy and governmental pension reforms that
have increased the retirement age. However, the transition from defined
benefit (DB) to defined contribution (DC) retirement plans also appears
to be playing a significant role. Developed economies with older
retirement ages tend to be further along in the transition from DB to DC
only,” said John Ball, senior consultant at Towers Watson.

Other key findings from the survey include:

Around the globe, between 40% and 80% of employees are worried about
their current and future financial situation, with the greatest
concern among employees in Chile, Mexico and Brazil.

Between 70% and 80% of respondents acknowledge the need to save more
in general. Between half and three-quarters of respondents say they
will need to save much more to achieve a comfortable level of income
in retirement.

About the Survey

Towers Watson’s Global
Benefit Attitudes Survey examines employees’ attitudes toward their
health and retirement benefits. Conducted in 12 economies between June
and September 2013, the survey was completed by 22,347 employees
representing all job levels and major industry sectors. Results are
weighted by age, gender and household income to the national average of
workers. The margin of error for the total sample is ±1.4%.

About Towers Watson

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional
services company that helps organizations improve performance through
effective people, risk and financial management. The company offers
consulting, technology and solutions in the areas of benefits, talent
management, rewards, and risk and capital management. Towers Watson has
more than 14,000 associates around the world and is located on the web
at towerswatson.com.